Question

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 70 units at $30 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 162-unit purchase at $34 per unit; the second was a 200-unit purchase at $36 per unit. During the period, it sold 276 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses a. FIFO: FIFO Units Unit Cost Cost of Goods Sold $ 0 @ @ 0 @ 0 Total 0 $ 0 FIFO Units Unit Cost Ending Inventory $ @

Answer 1

a.FIFO

Cost of Goods sold:-

FIFO	Units		Unit cost		Cost of Goods sold
Opening Stock	70	@	30	=	2100
First Batch	162	@	34	=	5508
Second Batch	44	@	36	=	1584
Total Cost of Goods sold	276				9192

Ending inventory:-

FIFO	Units		Unit cost		Cost of Goods sold
Second Batch	156	@	36	=	5616

b.LIFO

Cost of Goods sold:-

LIFO	Units		Unit cost		Cost of Goods sold
Second Batch	200	@	36	=	7200
First Batch	76	@	34	=	2584
Total Cost of Goods sold	276				9784

Ending inventory:-

LIFO	Units		Unit cost		Cost of Goods sold
Opening Stock	70	@	30	=	2100
First Batch	86	@	34	=	2924
Total ending inventory	156				5024

c.Weighted average

Details	Units		Unit cost		Cost of Goods sold
Opening Stock	70	@	30	=	2100
First Batch	162	@	34	=	5508
Second Batch	200	@	36	=	7200
Total	432				14808

Average cost = 14808 / 432 = 34.28 = 34(rounded off)

Cost of Goods sold	276	units	@	34	=	$9384
Ending inventory	156	units	@	34	=	$5304